$100m for First Platinum Refinery

25 May 2014, Harare – Golden Sibanda and Lloyd Gumbo — Platinum miners in Zimbabwe have pooled US$100 million to kick-start construction of a refinery for the precious metal in the next two months as they heed Government’s call for value addition and beneficiation. Domestic beneficiation is in line with Zim-Asset, Government’s economic blueprint for 2013 to 2018, that aims to achieve sustainable development and social equity on the back of judicious exploitation of the country’s abundant human and natural resources.

The blueprint is built around four strategic clusters namely: Food Security and Nutrition; Social Services and Poverty Eradication; Infrastructure and Utilities; and Value Addition and Beneficiation.

Completing the refinery will cost over US$3.5 billion and for it to be fully productive, Zesa Holdings must guarantee uninterrupted power supply.

The power utility yesterday said it was optimistic that its short-term power expansion plans would dovetail with the plans, adding that it was in Zesa’s best interests to guarantee electricity supply because platinum miners were among their best clients.

Chamber of Mines president Mr Alex Mhembere revealed the platinum mining companies’ refinery plans at the official opening of the body’s 75th annual general meeting in Victoria Falls yesterday.

“We can disclose that since the February symposium on beneficiation and value addition, progress has already been registered in a number of areas.

“The platinum producers will be establishing beneficiation facilities from July (2014) and have already committed US$100 million towards this project,” Mr Mhembere said.

At present they export matte for refining in South Africa prejudicing the country of revenue accruing from platinum group metals that come as by-products.

Government indicated in 2013 that it would impose a total ban on exports of raw platinum by the end of 2014 when a two-year ultimatum it gave for construction of a precious metals refinery expires.

There is already a 15 percent levy on un-beneficiated platinum exports in a bid to push miners to build a refinery.

In his speech to the Chamber of Mines, Mines and Mining Development Minister Walter Chidhakwa said, “To ensure that the country maximises the benefits from its mineral resources in terms of value, employment creation, skills and technology transfer and sustainable economic development, the mining industry needs to promote local beneficiation and value addition.”

Mr Mhembere said mining firms were committed to beneficiation in all areas where “we have mining comparative and competitive advantages”.

As an example of this committment, Mr Mhembere cited Murowa Diamonds which is beneficiating stones to acid clean stage.

He said increasing gold deliveries to Fidelity Printers and Refineries through centralisation of gold buying centres for small and artisanal miners would enhance value addition and beneficiation.

Zimbabwe has the second-largest platinum reserves in the world after South Africa.

Local miners had said they would only establish a refinery after reaching 500 000 tonnes ore output annually. At the moment the companies say they produce 300 000 tonnes per year, a figure Government has dismissed.

Their other precondition for a refinery has been uninterrupted electricity supplies.

Zesa Holdings chief executive Engineer Josh Chifamba said they were working flat-out to increase power generation before the refinery starts operating, probably in 2016 as envisaged in Zim-Asset.

He said expansion of Kariba South hydro and Hwange thermal power stations would add 900 megawatts to the national grid.

“The programme is for the short to medium-term because we are also in discussions with Nampower of Namibia to come as project co-ordinator for our thermal stations in Harare and Bulawayo, which should bring about 120MW in 18 months,” he said.

“They have shown interest because they have been here and have visited the stations. We are expecting them back in about two months. The project is lucrative because it is cheaper as it will cost less than US$1 million per megawatt compared to new projects like Kariba and Hwange that will cost about US$2,5 million per megawatt in the case of Kariba.

“We will be able to deliver the Nampower arrangement earlier because it will take us less than two years. We look forward to the platinum companies refining here because it will make our project bankable since they are big customers.”

He said solar projects would add 300MW to the national grid.

Zimbabwe is generating an average of 1 300MW against peak demand of 2 200MW.

The beneficiation thrust has seen new entrants into chrome mining, such as AfroChina which is setting up smelting facilities in Selous; while the imminent revival of the renamed NewZim Steel is expected to further advance value addition to minerals.

The Chamber of Mines president called on Government to ensure the operating environment was conducive for such investments.

Miners complain about high royalty, fiscal and related charges, low and inconsistent power supplies, and expensive labour.

Mining companies have been hit by a drop in metals prices on global markets, and Mr Mhembere said mining firms should work on costs and efficiencies to offset this.

The gold mining sector has been hardest hit and Mr Mhembere warned that if something was not done quickly, production would further decline.

“We all know that gold is one of the main sub-sectors of the mining industry contributing 29 percent of the total value of mineral output in the country. The subsector has witnessed 31 percent decrease in prices from the beginning of the year.